Therefore you're seeing prices come back down to where they are reflecting supply/demand fundamentals.

What's happening with commodities in general is that demand is declining while supply is increasing. Likewise this is also true in the Gold, which in the last analysis is just another commodity and trades like a commodity.

So what is the relationship between Gold ETFs, physical Gold and Gold futures?

In the last ten day period, we have seen the largest liquidation or the largest selling of Gold ETF shares since Gold ETFs were formed. Why? First it was a reaction to what the Dollar is doing. Dollar moves higher. Gold moves lower. Secondly since Gold is a commodity, commodities in general are moving lower because of the bust of the ten-year super-cycle. Thirdly, industrial and commercial demand for Gold must be sustained to support its prices -- even though people think Gold is a financial metal.

Global manufacturing indices are falling in virtually every industrialized country. Also GDP is falling. And the commercial and industrial demand for Gold is also falling. This is an important component because even though Gold is a financial metal it is ultimately sensitive to supply and demand.

Recently there has been a lot of selling Gold in the ETFs. Gold ETFs are after all just a way of packaging it up. You've seen selling in the futures and in the cash market and in the scrap market. Of course it's more pronounced in the ETFs because ETFs are now the largest single holders of Gold on the planet. They own more than any other central bank does now -- about 21,000 tons of Gold. This bespeaks of how popular ETFs have become.

* AL MARTIN, author of "The Conspirators: Secrets of an Iran Contra Insider," is an Independent Political-Economic Analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. He is also currently trading the commodity futures market day and night and has a teleconferencing service to facilitate transactions in the markets. This is a service for independent experienced traders.

Also a Kindle eBook version of "The Conspirators: Secrets of an Iran Contra Insider" by Al Martin is coming soon.

And a Kindle eBook version of "One Nation Under Fraud: The Collected Writings of Al Martin," a collection of Al Martin columns published on Al Martin Raw.com since 2000, is also in the works. Stay tuned...